of managing an international system in which we are the only global power with the institutions that we have, the complexity of our intelligence organizations, that create the situation where no one really has a clear idea what everyone is doing. aside from creating unnecessary chaos in the world, it creates real challenges for the republic. how you maintain a democratic society in the face of both this consumelating power. >> host: the word balancing i think is a word that occurs a lot in the course of the book, you know, and what you're talking about in many different areas of the world really is this question of what course is the u.s. going to chart?

>> guest: i'm not going to compare the united states to these, but nazi germany and napoleon tried to rule by main force. it doesn't work very well. the persians ruled subtly and indirectly by managing various players and controlling them and bringing them to the point where they wanted that.

drama and subtlety to now has not been a hallmark of american diplomacy however. >> guest: we are a very young country and it's only been 20 years, and i regard december 31, 1991 as the breakpoint in history here first moment in which in five years in which there was no european global power. and second it was the mode of the united states quite by surprise that there were stunned it happened. and it takes time to build institutions. it takes time to build political culture. it's not surprising that the first 10 years everyone was tv and history, we're not going to have any wars, then suddenly 9/11 happened and it's all about the war that would never end in the islamic world. the united states is off balance. it didn't expect, that's why said this is the unexpected empire. it didn't expect to be in this enormously powerful position. it doesn't know how to manage

it. this is the decade, the third decade that it must come to terms with the incredible strange, not only the international system but also -- >> host: and the way i've struck by your argument about the need for a new diplomacy and new institutions to go along with it that will be the agents of the sort of rebalancing. not really a clear sign that we're two decades into the project of building post-cold war institutions. if anything, that project seems to been put a note or perhaps to have gone in the wrong direction by the reframing of american foreign policy as a global war on terror over the last decade. >> guest: i think that has to be adjusted. the british, the seven-year counterinsurgency in north america, where they were badly defeated. germans got their heads handed

to them by the germans. it's not uncommon for a great embryo systems as they emerge first to be totally unaware that they are an embryo system, and second, to suffer serious reverses. we americans like others tend to be operatic. as soon as we encounter a serious problem we declare that we are failures. this is a process we're going to go to. the first step, sort of a 12 step process is admitting what we are. for the united states admitting that we are an empire is extraordinarily difficult. we are the first great anti-israel project. of the american revolution. been warned to avoid foreign entanglements. we have as recently as world war ii argue that europe is not our business. there are large number of people who feel that we should disengage. >> host: that something hasn't

gone away. that's not a historical artifact. that's going to be an increasingly flat debate over the next two years. >> guest: it's a debate. it's meaningless. the united states is 25% of the world economy. how do you disengage from the rest of the world with everything you do, unintended to contented has devastating potential or for some region of the world. when we put product, large numbers of people either celebrate or cry. this is the problem. our institutions are not really aware of the problems we cause at the decisions we make. the presidents office is not always aware of what everyone is doing. and the public is unaware of how dependent they are on these relationships for their own well being. so there is a lack of awareness

both our institutions and our political culture, of the necessity of these relationships but we like to venture that would have the benefits that all of the nasser thought billy will go away. >> host: vasari the dialogue is taking place between u.s. and china, which is to say china is probably running through the end of its course of making argument we're simply a developing country, we can't afford to bear the burdens of international leadership that the united states has been paying. the first sign china wants to be recognized as the second largest economy in the world, growing toward eating at some point in the next couple of decades the largest economy in the world. at some point those conversations are going to meet. and the question of who pays the bill for global leadership and what is required in order to sustain that is going to come. i want to back up, december 31, 1991. you call the breakpoint in history. the collapse of the soviet union is what happened on that day.

and the birth of the post-soviet era, not only in american foreign policy but in terms of literally rewriting the map of the world as we knew it. two decades later we're going to mark the anniversary this year. things haven't necessary turned out as some of the optimists would have had them. we have not seen a tidal wave of democracy and freedom wash across central asia and the caucasus and russia itself, quite the contrary. resurgence of nationalism. new conflicts break out. we've seen really tempered expectations when it comes to what kind of political economic and social system is going to be existing across the soviet union. i want to walk through your map of the world two decades after the collapse. you have some views that are very controversial, that are making some unexpected, or perhaps predictions that some of

our readers will necessarily know what to make up. russia itself, tell me where you see russia headed in the next decade. >> guest: russia is russia. it is not a copy at the jfk school. russia for 200 years has had at its center security system, both under the czar, under the soviets. around this secure the system, the state grew up. around the state grew up relationships throughout the country. there were market relationships and state-controlled relationships. russia is not the united states. is never going to present to be the united states. the russian empire and the soviet union were not accidental. it bound together economically and politically regions that had a mutual dependence your division of the liberals in russia and the united states was

that following the fall of the soviet union they would reorient themselves towards europe, the united states. they fail to understand that these countries cannot compete in any reasonable time frame in europe, the more dependent they became on your of the week became. and also russia as a geopolitical entity. it experienced some terrible wars in its history, and its extremist cautious about expansion of things like nato. it regards made as a military alliance. we regard it as a club of nice people are fairly mismatched about what it is. and as the united states moved into the balkans and nato moved into the baltics, as the orange revolution, the ukraine took off, as the united states became very influential in central asia, the russian saw a second encirclement taking place. so if containment one, a containment of russia after world war ii, putin from the kgb

saw a second encirclement. the russians also, they became exporters of primary commodities. not only natural gas but everything else. >> host: they had in many ways their economy had been based on that evening the soviet time. >> guest: gas problems optimize that. so rather than -- >> host: they saw the collapse of the industrial base. >> guest: and putin deliberately said we're not going to try to reinvest the whole gaza. we will look at gasp problems but also grain exports, would exports, the range of primary commodities as something we can do now that builds dependencies, creates political advantages for us. where as under brezhnev the strategy was take these enterprises, these industrial enterprises and continue investing in them.

putin made a fundamental change. so there are two institutions emerged in russia. in the first part of the 21st century. the first was a divide. the second was gas problem. and these two institutions played off against each other. and also to increase their leverage, particularly with the europeans, particularly with the germans. >> host: i was struck by your argument that russia in the long-term is weak, but perhaps in the short term of the next decade or so may come once again to play very significant role in terms of obstructing u.s. goals in his dealings with your. what you mean by that? what is the contradiction? >> guest: power is relative. in the former soviet union, russia is stronger. europe is i won't say disarmed,

but certainly militarily weak and economically strong. but has a very heavy depends on natural gas. there are ways the europeans can move beyond that dependency. but over the next 10 years they're going to require russian resources. the germans have also reached a point in the european union that they're asking basic questions about what is the use of this? they have demographic problems. they need workers. they don't want to have any more turkish workers. that's a problem for them. so when you can't have the workers come to your factories, even though your factories need workers, oddly enough russia in the is a declining population still have surplus labor. in other words, much of the russian economy is unemployed or underemployed, and a welcome russian technology. so what i think has happened here is russia and germany have increasingly intense economic

relationships. they cooperate, and neither of them are particularly happy of the world run by the united states. germany is not yet moved to this point. germany is still sorting through the wreckage of the e.u. and trying to figure out which way it's going to go. i suspect that it has stronger interests with russia at the moment. in the long run there was a reason soviet union collapsed. that reason hasn't gone away. so if i look out longer, i see those reasons there and see another weakness. but in the short run, given the state of the e.u., given the state of russia relative to the e.u., given the situation in the former soviet income especially given the massive preoccupation of the united states. as opposed to europe, this is an opportunity for russia to try to

stabilize itself and it is doing fairly well. >> host: let's talk about the middle east. what does the middle east tell us about the perils of forecasting and the dangers of accepting what we think is the >> guest: we have to define the middle east which is a very vague term. we speak about the area the united states is engaged in, i think about the mediterranean, from israel over. this is very different from north africa. >> host: the greater middle east you are talking about. >> guest: some people have used the middle east to include any islamic country. some people use it with errors. the british foreign office does a great deal of use. i'm interested in areas where the united states is waging war, which is iraq, afghanistan, to some extent pakistan, possibly iran. this is the battle the united states is facing. the balance of power in the

region, the iran iraqi, the indo-pakistani. each one of them have destabilized over 10 years. in the air of israel relationship, barring some dramatic change in egypt over time, israel is so dominant that it creates new realities on the ground. there's a difference to what the united states really says very often. in afghanistan the united states is asking pakistan to do things that create stability, that will weaken pakistan, that potentially cratered an independent regional power in india, that the united states may not appreciate in the long run. and, of course, the invasion of iraq has destroyed the iraq power, they're forgetting nuclear weapons. iran is the dominant conventional military force in the region. if the united states is there. the united states as its policies to withdraw from iraq, the potential for iran to fill

the vacuum is extremely high. that in turn changes the balance of power, orderlies the political dynamic in the arabian peninsula. there are finally important decisions to be made. on the one hand, the united states must rebalance its global policy to deal with issues like russia, to deal with china and so on. at the same time the united states can't simply withdraw, it doesn't have the ability to simply exit and doesn't have an endgame in any of these areas. so we have a very powerful nation, much less possible it might be another circumstances because it's so off-balance. >> host: that's where i was really surprised in a way to look at where you're taking the consequences in that analysis. let's take those three that you mention, india, pakistan, iraq, iran and israel and palestine. in all three cases i think you

have gone out and looked at some ways in which we might end up a decade in a place that is very different and we are not, whether it's your thought of really what i would call a strategic distancing from israel, not a rejection of israel but he be prioritized in of our mediation efforts in israel-palestine conflict. india-pakistan i think that's where i was most surprised to read your book. right now there's a lot of talk in washington in particular about the strategic prospects of a potentially invigorated alliance with india. of course, president obama just made the trip there last fall. this falls on actually bush's foreign policy emphasis on building a new and substantively different kind of relationship with india. and really come after the enormous disappointments of a long-term year strategic partnership with pakistan, this is not a new recommendation,

we've had a partnership with pakistan, it seems that failed in some key respects. so i want to get back to that. and then, of course, your third area that you look at, which is iran-iraq, the destabilization called by the u.s. invasion of iraq and a recommendation that ultimately we're going to have to find a sort of nixon in china moment here where no mother how unpalatable it may seem we come to some different kind of accommodation, or even perhaps a new kind of alliance with iran. so, israel and palestine first. >> guest: we are committed to the survival of israel. survival of israel is simply not at issue. if iran were to develop nuclear weapons, which israelis now say is three-five years out, that's another issue. but under the current circumstances, the issue here is not survival of israel. in 1973-74 it wasn't. and at that time we gave $3 billion in aid which was 25%

of its gdp, which today is 1.5% of its gdp. the relationship itself has changed. the foundation of the relationship guaranteeing israel's right to exist is not the issue. the level of aid that we provide is not critical. it's not so much that i want to change the relationship. the relationship has changed. the question now is, we had one set of relations prior to 1967 where we gave very little aid to israel. through the second period, caught 67 to recently, where the united states and israel had a partnership. not advocating changing the partnership. i'm wondering what we are partnering on. israel's view is that it must create a reality on the ground into which settlements, institutions and so on, that control the palestinians can be put in place.

and that context some sort of negotiations is possible. the united states has an interest in the stability in the region, not necessarily the israeli solution. the idea that the united states must have a track whichever israeli government comes into power brings to the question what is the benefit for the united states. there's intelligence sharing with israel. that will not continue because israel needs it. to the point of redefining relationships is not somebody at a think tank publishes a paper and says here's a wonderful idea. that apply to the other regions as well. it is the recognition that the relationship has changed. that the terms of endearment if you will are still there, but not what they were before. and adjusting to policies satisfactorily. particularly at a time when the united states is so bogged down elsewhere. >> host: what other tools and a toolkit for making those kind of adjustments?

>> guest: the first thing is recognizing that relationship has changed already. that it's not your toolkit that changed it. the only thing your toolkit can do is adjust your policy to the reality that you're facing at this moment. or potentially facing in the future. >> host: that's what's so striking. yet barack obama come into office speaking in a different manner about the challenges in the middle east, certainly than president bush had before him. i think what's been interesting to observe over the last couple of years is that any and obama up up until now has not managed a major shift. >> guest: that's what's crucial, speech is very nice and politics is very nice. >> host: analytical observations also don't usually translate per se into policy shifts or the rebalancing of this sort. >> guest: which is why i'm not interested in foreign policy. obama is a perfect example. a person who genuinely wanted a

different foreign policy. and was unable to do it. it's equally interesting to look at george w. bush. it raises the question to what extent did he really have the options that we like to do. we like to view our presidents with magical powers. that we make decisions in a vacuum in create policies, and people to speak to the president are semi-magical and so on and so forth. i live in austin, texas. to avoid the demagogues of washington. it's extremely important understand how little choice obama had. the relationship that george w. bush had with chancellor merkel was not based on the fact that george w. bush was a louse. he may have been. it was based on the fact that germany as a nation has interests, that they do not fully coincide any longer with those of the united states. it's impossible to pretend that

we're in the middle of the cold war and his relationship -- if you take the president out of a different present in, regardless of his intentions, he will wind up with the same relationship. it's not a personal relationship. it's not that they get along or they don't get along or they like each other. germany is a nation of many, tens of megs of people, and the united states a similar nation, the present is the end product. at times he can lead, but he leaves best when he is going to the place where we are going anyway. and obama is perhaps a critic in the limits of foreign policy. >> host: for certainly the limits of rhetoric. though so question about that. >> guest: you can turn your rhetoric into many, many volumes of papers and policy papers. the beginning was that u.s.-german relations could have been what they were 20 years ago. had it not been for the

unilateralism of george w. bush. the difference in perception is like this, obama's position was i will be a much more pleasant person. and, therefore, the germans will be much more to help me. the german position was thank god with a have a president who would ask us to do things we don't want to do. because they had this tremendous love affair, the nobel peace prize everything else, and it was suddenly, my goodness, barack obama is an american president. and angela merkel is a german chancellor. >> host: i think you're right but i would like to go back to one of your earlier point, which is what does it mean for the united states should grow into accepting its role as a sort of global empire, if you will, or certainly in a power sense, an empire? you make the case that empire requires a much more sophisticated foreign policy in which you operate through

regional alliances, and even sort of networks of much more sophisticated ways of looking at what's happening out round the world to interest than the sheer exercise of force or hard power, if you will. you could argue that in some way that was what barack obama sent out to do in the world. his embrace of multilateralism was and if you almost certainly an effort to rebalance the world, where the simple projection of american force -- >> guest: there in is the rebalancing of the world. the vision of the present is an engineer. prior to that there has to be sophistication of understanding the personal forces. what are the national interest? what are things that others cannot agree to? what are the things that they must have? it is essential that a foreign policy could build on the concept of constraints. one's own constraints, understand what is you cannot

give up, what you must have, understanding other people. so the idea that building alliances takes place in a vacuum, that you simply reach out is the problem. the problem is that within the confines of a given reality of foreign policy, it is possible to manage. it is not possible to abolish that. so when the british dominated india, they reengineered in a way, but by taking advantage of the tensions of the palace of power within that area. they didn't simply land troops and try to take it over. similarly, the united states had the option in the middle east to manage the existing relationships, but the first thing you must or stand, what are the existing relationships, what are the need, what other requirements. and i think one of the things that obama had to learn, we will

see if he is learned it, is goodwill. insufficient. before you go out you have to understand the limits, the constraints. and that's what makes forecasting this insert is possible. i certainly can't predict what humor barack obama will think in the morning i went initiative you will undertake. i can talk about what will fail, because the other side can't possibly agree to it. and i can understand those things that tie nation's together. so whether putin is there or putin is not, russia is an exporter of natural gas. germany is a consumer trend would look at the tweed and you talked about that has shaped the last two decades of geopolitics, neither which were very predictable are certainly were predicted by the vast majority of the analysts and experts, the breakup of the soviet union in 1991 and the attacks of 9/11.

you could set that al qaeda represented an actual threat, you know, to carry out dramatic attacks to u.s. homeland. they done so already in 1993. he would've been really, really other on a limb, and i'm not sure anyone was predicting that would be a shaping force of international affairs in the first decade of the 21st century. same thing for the breakup of the soviet union. there were those who accurately diagnosed its internal rot, just as there are those today who have been diagnosing the internal rot across the regimes of the arab world, for example,. >> guest: which is what it's easy to forecast than 100 years. >> host: we been waiting for the collapse of the castro regime in cuba for quite some time. >> guest: it is impossible to admit to imagine that the british be defeated by the american insurgents. when we look back on british history in the 19th and first the 20 century, it was not a critical event. over the long run, certain

things that are of enormous importance to both wars, shrink to insignificance. when we look back on the vietnam war, which was such an enormous event in american history, look back, you know, context even today, it has a lesser significance in terms of what will happen. you began the conversation by saying that i've gone from a more ambitious to a less ambitious -- >> host: it will be harder, right? >> guest: yeah, it is easy to look for 100 years, blanking out the unexpected things and look at the main thrust. you may be wrong but that's possible. at the beginning of the 20th century, if i'd written a book i wish i would've written about the collapse of the british empire. the rise of mass warfare. things of that sort. without getting into specifics, in fact h.g. wells and others wrote about all those things.

understand, what matters in the next 100 years? what is now the driving forces? the demographics that are political and so on. i wanted to come back into a 10 year framework, because there is a point at which this has to play out. it has to begin playing out. this is a point where policy and history meet each other. not any kind of neat way of policymakers, but in a more complex way of policy encountering and emerging reality. and that's what i want to do with this book. i wanted to see the hard part, where i take a look at a 9/11, and i say so what did this decade mean. and i'm making the argument that in the end this was not a pivotal war.

from the standpoint of objects at the time, it was an enormously noisy thing. so was the work 1898. in retrospect it was a fairly passing thing. when i look at what happened at 9/11 i would put it this way. when the soviet union collapsed, a dividing line in the islam world shattered. and a region of yugoslavia was thrown off balance. a massive earthquake took place. the first earthquake with yugoslavia. which was regarded as kind of a one of the kind come had nothing to do with it but it was actually a precursor to a massive destabilization. the united states, with moderate force, 150,000 men, went in and probably made the situation less

ideal than it would have been otherwise. nevertheless, the question is, so what is the lasting effect on this? you could say it a number of ways. of uprisings that would create jihadists states. complete failure. the american goal, if you understand correct was triggered a series of pro-american regimes, preferably with governments like wisconsin, governing in this region to iraq was the case. that didn't happen. but what is remarkable to me about the region is how unchanged it is. >> host: i think that's where over the next decade we're going to see, is this really sort of a very, very long in the game of the winning of a client state of the soviet versus u.s. era, and you know, we don't have a sense yet of what really is going to replace that, certainly across the broader middle east. are we seeing, in other words,

not the beginning of the next stage but the very, very long in the game of the last stage of -- >> guest: the question becomes what we really want? >> host: it's funny you brought that back. that's exactly rise going to go next. i have to say, why are you down on the idea of the u.s. indian of lines when you look at the context of china's rise and the strategic nature of the indian ocean, and the genuine repeated failures of the u.s. policy of supporting pakistan? certainly, we will have long-term relations with india. relations with foreign countries is always enhanced by writing letters against them, in addition to positive things for them. the balance of power means that you do not make a unilateral unconditional commitment to any country. you understand we have to define interest in common, and it's

always essential as a great about our lesser power. and you say we have other options. coming into a relationship with the power goes against the principle of a prudent foreign policy. how you condition our relationship with india? well, given the geography it's very hard. china appears to be next-door though it is an. it's very far away. the american relationship with pakistan is the only lever that is available. do we want a subcontinent under the domination of a single power, regardless of what it is? i think it's more of interest in united states have a relationship with a country that has an element of insecurity in it. so when we talk about a sophisticated foreign policy, it doesn't simply mean people, diplomats can speak the language. it means understanding that a relationship with foreign countries extort a complex.

it is not monochromatic. they are our friends. they are our enemies. they consist of conflicting interests. and when i look at any country, i ask two questions. how could it benefit the united states? how can it be made clear that there are alternatives so that the dependency doesn't exist? so, the issue here is not shout have a close relationship with india. we will have a close relationship with india because we share a common interest, economic, political, military. the question is how do we shape that relationship? and i think one of the problems the united states has is a thing in terms of friends and enemies. this is a friend, and i've a friend, i want to be generous and forthcoming. think of it more as a business relationship. i had a business relationship with this person. i may or may not be his friend. that has nothing to do with the.

i want to make sure i have options. and i think it would be more healthy if we were to place the framework of u.s. relation countries to depersonalize it. >> host: that's exactly what's been going on in pakistan is that we have, in fact, made our dependency so clear with them. and actually they have a sense that our strategic calculation in the region is what you just outlined, that we prefer to have a friendly relationship with india -- relations with india and pakistan at the same time. it's possible. >> host: we've tried this strategic approach in the region and it hasn't worked out very well. >> guest: if you take a look at real-time we're talking about, which is 1948, i'm not too uncomfortable with the way it has evolved. certainly our invasion of afghanistan has created a problem for pakistan that threatens its integral stability.

when you speak to very many pakistanis, they look back in the 1990s period as a period where they were doing what the americans wanted. it was a period of relative stability. we may not like the government but that's not a cancer. we come back and say yes, but al qaeda develop in afghanistan and we didn't want that. that come back and said, yes, they did and that's unfortunate, but al qaeda could have developed anywhere else. al qaeda was an afghan movement. it happened to be there. the point that we ask now is how do we deal with this. presence, whether it is one year of five years, we are not going to be there permanently. pakistan is a permanent existence. interest in afghanistan. it does not want to have a hostile afghanistan at its back. and, therefore, whether it wants to or not have to take responsibility for afghanistan. the american goal is that al qaeda should not be in

afghanistan, but al qaeda is in yemen, somalia and cleveland trend what the point is if you look at south asia, do you disagree with those who consider pakistan and the pakistan-afghan to really be the most dangerously unstable part of the world? >> guest: i would not quote them as dangerous and stable part of the world. i think iran is potentially more, but it's not worth having -- it is certainly, the question had to get back into shape? de- stabilizing pakistan to the point that it collapses i don't think would create the security, making it the responsibly of pakistan, you know, make it what it is the it is a more interesting outcome. but the problem is that we have to ask more fundamental question. why are we in afghanistan, what was the strategy that president obama had in mind? president bush's strategy was a more modest one upholding key

areas of not really trying to dominate the country. president obama ran his campaign by argument we're in the wrong war. we are now in this war. it's not clear that we have the forces necessary to bring this to conclusion. and, therefore, we are stuck with a pakistan because i fear we withdraw, which? pakistan loses. oil we entice pakistan in various ways into collaborating in a stage withdrawal. so, this comes to the point that it really doesn't matter what happened in the past. if our goal is to somehow exit afghanistan without attempting to occupy it which is not a choice. we must deal with pakistan. i mean, who else can we? >> host: the question is not dealing with pakistan so much as what is the longer-term outcome in terms of are they going to come away from wherever we end up with a new status quo in

afghanistan, we commit to the campaign of undermining their neighbor next door in india. that's -- >> guest: we can avoid that by staying in afghanistan permanently. or live with it. so here's exactly how i approach the foreign policy issue. you pose the question, if pakistan comes to be secure in afghanistan, we can destabilize india? may well. shall be therefore state permit in afghanistan? how do we prevent that? what i come to say yeah, i think pakistan and india have reasons to distrust each other. i don't think they're going to go away. i think at this point and the history they will tend to undermine how can the united states benefit from that? how can it create a stable balance in which american interest our security? so those who say look, pakistan

is not to be trusted, i ask the question, okay, what is your and the problem is that we have, and it has also had 50,000 troops fighting in afghanistan. i regard that as an untenable position. i see no solutions except with in the context of a pakistani relationship. therefore, i regard, can we trust pakistan are not trust pakistan? i don't know what to do with it. because i see our country as having decisions. this is not a realist or an idealist position. this is simply the way we have played the cards that let us year. can we do this and get pakistan to stop undermining india and any to stop undermining pakistan? that we don't know how to do. and one of the problems is when you make your foreign policy that ambitious, that i don't

suffer want to get out -- >> host: the consequences are much, much higher. >> guest: and you leaders of in afghanistan. for the moment i much more interest in having those 150,000 troops out. i'm not particularly interested and i don't think it's a national interest of the united states what kind of government there is in kabul. and i want to see the united states more rebalance, able to respond to russian invasions of georgia and things of that sort. so i want a balanced foreign policy. afghanistan creates an unbalanced foreign policy. my question is how do i rebound? drama and one thing we haven't talked about at all so far is china. and, of course, we have a conversation about india and pakistan, the big piece of that we haven't talked about at all is china. you are of the view that some of the current almost hysteria about the rise of china and what it would mean for the long-term

consequences to american power has been broadly over seed in the u.s. tell me why. >> guest: statistics. there are 1.3 billion people in china. 600 million of them live in households earning less than $3 a day. 440 million live in households earning between three and $6 a day. in other words, china over 80% of it lives in poverty that is sub-saharan. there's a china that has about 69 people. they have average income of $20,000 a year. which is the size of france. it's not a trivial number but it's less than 5% of china. that china cannot sell to china. they're trying to find ways to do. you can't sell pipettes to a person who earns $3 a day. they are the hostage of the way. a gun pointing at the head of china is the rising american

savings rate. every dollar not spent at wal-mart is taken out of the chinese hide. the chinese are desperate at times to stabilize their system by increasing exports. the current profit margin is 1.7% on chinese exports, which i think is high. >> host: even a chinese official will tell you not necessarily to believe the statistics. >> guest: which means they're exporting that almost cost in order to prevent the thing they're most afraid of, unemployment. they can't keep that because at this point chinese wage rates are higher than those in mexico. if you take a look at shirts, you will find mexico and the philippines on it, not china. china has lost competitive advantage. like japan in 1990 when we all believe the massive japanese taking is all over, and we saw

them five rockefeller center. >> host: you are bold now on >> guest: just cyclically. japan this comes to a 20 year period in which it achieve its economic goals. it had a choice between having a crunching recession, unemployment and violating the social contract that underlines japanese society, which is you get a job at a company and used at the company. they made a strategic decision. the strategic decision was would have low interest rates and keep businesses going, and the avoid unemployment. from the standpoint of the western investors this was a lost decade because we couldn't invest in japan and making money. the japanese looked at it and said, we hadn't realized the purpose of japan was to give you opportunities to make money. they achieved what they wanted. this is one of the important things when talking about sophistication. understand what the japanese were afraid of.

unemployment. they need to understand why the policy wasn't stupid. it made perfect sense. they are now reaching the end of the cycle. their debt level has reached a point that probably is unsustainable. they're going to have to make fun of changes in their policy. i think that's going to unleash growth and social instability. but that being said they have one -- the one advantage that china doesn't. they don't have 1 billion people living in third world poverty. china does. the chinese are bitterly aware of that. which is why they are increasing crackdowns everywhere. having crises and succession, what we just saw. and also invest anywhere in the world outside of china. i had a joke when japan came up, the japanese are doing so well, why are they buying pebble beach? if the chinese are doing so spectacularly, why are they making massive investments

outside of china? into previous asian crises, the japanese in the 1997 and east asia crisis, the precursor event with capital flight. money moving out of those markets and investing overseas. we are not in the middle of chinese capital flight which the media is interpreting is the growing power of china to buy everything. but the simple point is that they're making rational investment decisions based on their fear of the future of the chinese economy caught between all these various think. >> host: just to be precise, is it your sense that the projections of continued chinese economic growth are overstated? do you not believe that china will surpass the u.s. as the world's largest economy sometime in the next decade or so? >> guest: 10 to 12% is very difficult. remember, china came from a position under mouthy tongue with the economy was in complete

shambles. the first two decades of growth simply for reconstructing. an economy with a firework force anything else. the last decade was brilliant economic plan. in the same we can invest in something as i said the same company rates, the chinese have to make readjustment in a growth rate. and they're doing it and doing it very carefully. this is why you can ask them to do we value any amount you want, they're not going to do. so it's not that china is going -- chinese between collapse and greatness. like japan there was a very similar situation. there is a readjustment of the normal. and japan went from a high growth economy, massively exporting and so on, to a different structural kind. driven by financial problems.

nonperforming loans in particular, and china is in that situation as well. i get into the question of -- but the point is it is not an insult to china to say you had a magnificent 30 years. annex 30 probably probably won't be exactly the same. >> host: even the projections suggest the rate of growth is going to go under the double digits that it's been at for certainly the last decade or so. that would still leave china on a course to become the world's dominant economy. >> guest: 8% growth is extraordinary. and i don't think it's an 8% growth right now. it's possible for an economy to grow at any rate if it's indifferent to reach return on capital. that's what the chinese are right now. if i have a company and i'm selling my product at low cost, i can have fantastic rates of growth just before i go bankrupt. that's what happened to the japanese.

at huge rates of growth in 88 and 89, 90. but as a low rates because bankers wanted to shut them down. so the chinese have that situation. this is why the margins on exports is so important. they have a fantastic rate of growth. that's not necessary healthy. >> host: they have, i think it's a very important factor, which is a democratic crisis, not only because of the sheer scale of the people who live in really difficult third world conditions of poverty, but also because of the cost of living other one china policy. you're looking at the disappearance of this enormous youth generation to power of growth in the long-term. there's a cliff between the third world and the rest. as china becomes a more sophisticated economy producing more sophisticated products, the level of education and expertise required to join that blocks out

the third world peace. and it can't rise. the real question in china is that same question trannineteen for the he attempted to rise in shanghai. he marched and he raised an army of peasants. peasants were better. they came back over 20 years and restructure china. the chinese government is painfully aware of how they began. which is why they are ruthlessly crushing any organization outside the party, they are not allowing anything to rise. if the chinese entered a period of economic dysfunction, which i think they are, then the question really isn't economic. the question is social. what happens there? i think the chinese are aware of that, and that's why several members of the pla, people's -- they are aware of that. they may whether that.

but for now the chinese are very inward, very concerned with how to manage the current problem. and if you they're confident they can manage it, perhaps they can but it's not going to be easy to. >> host: basically what you would say is that here in the west both the economic analysts and overall attendance have missed the underlying potential, political instability and china. it's not front and center. if you look at not just american but europeans analysis of china today, it's all about jealousy at the astonishing growth about the political instability. >> guest: there's an interesting social phenomenon in the west. in 1993-94, japan had already slowed down. they were still people writing articles on the japanese. it's about a three or four year lag between the economic reality, particularly in asia,

and the recognition by the west, whole theories about why but it doesn't matter. we are not in a position where china has already stopped behaving the way it did a year ago. it's going to take several years before it is noticed. so, there is a process, that enthusiasm for the chinese economy grows. but is no longer universal. or any number of economists now who are writing about the coming bubble in china. but businesses also have a very, you know, wal-mart, by beginning to source from countries outside china because china has become too expensive. they are not particularly sentimental and they don't really write position papers. they are simply changing the sourcing. this is a real challenge. vietnam was a real challenge to china. so is the philippines, pakistan, other countries.

but the point that i'm making is it is natural and normal for a country after 30 years, exponential growth, to slow down dramatically. it is doing that. the consequences, the economy could handle it if only it didn't have a billion for people. they could manage it like the japanese did but china has a problem. >> host: just to go back for seconds into the big picture, we're almost out of time, many analysts look at the 21st century, talked about this as sort of the pacific decade, the asian decade to come or even century to come, the waning of europe. i don't really see that in your work. you seem to be much more in the way reminding us of the relative, for example, for strategic thinking. >> guest: what im saying it is going to be the american decade and the american century. look, the collapse of european

improve system including the collapse of the soviet union, left the united states standing as a continental power. with very deep resources. in command of the world sees. with a quarter of the economy. with bases in 27 countries and so on. there is nothing even close. we talk about the bric countries. the bric countries have to grow altogether by 75%. so all for equal the united states. >> host: so 10 years from now with a nice taste still be spending that much? >> guest: i think so. but here's the point. the united states will go through extreme troubles of instability. it will be constantly reminding itself is on the verge of collapse, and it will not collapse. it is very much like britain and rome. if you look at the realms beaches in the senate, just before the empire, use the

absolute predictions of catastrophe. that happened to. >> host: okay, so 10 years so now we'll come back and have this conversation. we will see how it worked out. >> guest: it will be the same conversation. >> host: thank you so much. it's been a great conversation today. >> guest: i enjoyed it. >> that was "after words," booktv signature program in which authors of latest nonfiction books are in the by journalists, public policymakers, legislators and others familiar with the material. "after words" airs every weekend on booktv at 10 p.m. on saturday, 12 and 9 p.m. on sunday and 12 a.m. on monday. you can also watch "after words" online. go to booktv.org and click on "after words" in the booktv series on the upper right side of the page. >> up next on booktv, investigative reporter annie

jacobsen presents the history of the military base, area 51, which is located in the nevada desert. the author use of recently declassified documents, on site reporting and interviews numerous people who worked and lived at the base. this is about an hour. >> good evening, everyone. i wanted to thank the commonwealth club for having me, and everyone for being here. it's a real office dream to have a full house for a book speaking if it. and thank you for having me on your show, and also for moderating tonight. and we'll get to some questions because i know people love to ask questions. i certainly do. i wouldn't be here if i didn't have that sense of curiosity, so what i'm going to start with, i'm going to actually read you two paragraphs from my book. but i'm going to set the stage so to speak a little bit first and let you know where area 51 is other than in people's

imagination. because it really does exist. and it's located in southern nevada about 75 miles north of las vegas. it's in a much bigger parcel of land that is the largest federally restricted piece of real estate in the united states. it's about the size of connecticut, and it's called the nevada test and training range. inside of the nevada test and training range there is 1350 square miles parcel called the nevada test site. the nevada test site is divided up into quadrants. quadrant numbers have changed and shifted and gone underground over the years, but in essence they are one through 30, with some mysteriously missing. area 51 sits just outside of the nevada test site, but inside the crater land parcel that is the nevada test and training range. and '80s there that my book,

the basis of my book centers, and that is where many of the most secret and perhaps most alarming national security projects took place, but also many of the most fantastic ones that kept us all safe, argue they kept us out of world war iii with the russians. certainly helped our pilots in vietnam. so some really great things went on there, and probably continue to go on there today. but with that said i'm going to read you two paragraphs in my book about, that really speak to what the book is. and when i was researching the book i was able to interview a total of 74 men who had rare unprecedented access to area 51. 32 of whom lived and worked at the base for extended periods of time. and about 20 of them i